Crude futures gain as US Federal Reserve turns bullish

17 May 2013 14:16[Source: ICIS news]

LONDON (ICIS)--ICE Brent crude futures gained more than $1.00/bbl as the US Federal Reserve hinted at cutting back stimulus measures amid a bullish outlook.

By 12:32 GMT, the front-month July ICE Brent contract touched an intra-day high at $104.87/bbl – a gain of $1.09/bbl compared to the previous settlement. The contract then edged lower to trade around $104.60/bbl.

At the same time, the front-month June NYMEX WTI contract was trading around $95.67/bbl, having touched an intra-day high at $95.88/bbl, a gain of 72 cents/bbl compared to the settlement on Thursday.

The US Federal Reserve was heard to have said it could ease its loose monetary policy this summer, and could stop its asset purchase programme by the end of the year, on the expectation that the jobs market will improve.

However, despite the Federal Reserve’s bullish outlook, recent economic data from the US implies the world’s largest economy is faltering.

Official data from the US Department of Labor showed fresh claims for unemployment benefits increased last week by 32,000 to 360,000. Additionally, US factory output slumped by 0.40% in April – the third decline in four months, according to the Federal Reserve.

Adding to the bearish picture, China’s first quarter GDP came in at 7.70% growth – below the forecast level of around 8.00%.

More worryingly, Eurostat – the statistical office of the EU – released data on Friday showing the construction sector in the 17-nation eurozone slumped by 1.70% in March, while the wider 27-nation EU fell by 1.10%.

Additionally, earlier this week Eurostat confirmed that the eurozone economy contracted by 0.20%, while the 27-nation EU fared only marginally better, with GDP falling by 0.10%.